Buyers hold ground in upfront standoff

With the broadcast prime-time TV upfront now expected to wrap flat to down from last year, media agencies played hardball in negotiations last week, holding out for better rates.

Network sales executives predict that this year's commitments will be off as much as $300 million. Early estimates peg the market to end closer to $9.1 billion. Last season TV broadcast networks took in $9.5 billion.

"All the networks will be down this year," said an executive at one of the broadcast networks.

One senior media-agency buyer said the standoff meant "all the networks were a lot more collaborative this year." This buyer reported that CBS, Fox, WB and UPN finished with their negotiations, with NBC due to wrap up next week.

Interpublic Group of Cos.' Magna Global, network executives said, was holding firm on demands to lower cost per thousand rates, though it had done some deals. Magna executives did not respond to requests for comment. WPP Group's MindShare and Mediaedge:cia had done deals individually instead of through their negotiating unit Group M. A spokeswoman for MindShare would not comment.

CBS, which garnered $2.2 billion last year, was the most successful at getting its demands for double-digit CPM increases met. Les Moonves, newly installed Viacom co-chief operating officer said: "We are starting to hit our projections of low double digits." One media buyer said 9% increases were on the low end of what CBS was asking. But one senior agency executive noted that even CBS was hitting some snags. "We are hitting a stalemate," the executive said. "Maybe there's a difference of opinion about whether CBS can muster [CPM increases of] nine-plus."

When negotiations wrap, NBC is expected to land $2.9 billion, mostly due to the network not having the added bonus of selling Olympic inventory, which brings its total down from last year's $3 billion. An informal survey of buyers late week indicated that NBC, after its late start, saw some activity at CPM increases anywhere between 6% to 8%. "NBC is sticking to their guns," said one network executive. Others reported the network was keen to close deals, and showed an unusual amount of flexibility.

`a long standoff'

Separately, ABC, which some have said has struggled to gain CPMs of between 5% and 6%, is 50% to 60% sold, executives said. Some executives close to the network expect it to be down at least $100 million compared with last year's $1.7 billion commitments.

"There has been a long standoff when you consider that cable did so well," said Kristi Argyilan, exec VP-media director, Interpublic's Hill, Holliday, Connors, Cosmopulos. "CBS and NBC are really the top takers." She believes the market was down because buyers did not have the same optimism about broadcast network programming as they did with cable.

A number of buyers report either cable has taken a lot of money out of the broadcast pot this year or budgets are down. One senior cable executive said: "The broadcast networks will be down 2% overall and the cable networks are up 20% on a high sellout rate."

Fox, which has less inventory to sell, has finished its upfront deals, with CPM estimates in the 7% to 8% range. Fox took $1.6 billion in 2003. Despite ratings declines last season, buyers said they expected WB to be only slightly down in revenue, with CPMs in the 7% to 8% range. UPN, thanks to the rating boost last season from "America's Next Top Model," is closing deals.